The expansion plan comes despite
a growing concerns about a slowdown in the global economy amid rising interest
rates and weaker demand in top buyer China.
Japan's biggest steelmaker Nippon
Steel Corp plans to almost double crude steel output capacity at its
India's Hazira plant to secure more of the growing market, an executive said.
The
expansion plan comes despite a growing concerns about a slowdown in the global
economy amid rising interest rates and weaker demand in top buyer China.
"We
are accelerating investment in India," Takahiro Mori, executive vice
president at Nippon Steel, told Reuters on Tuesday. "In terms of steel,
India is regarded as the only market that will grow significantly."
In 2019,
Nippon Steel and ArcelorMittal jointly bought India's bankrupt Essar Steel, now
called AM/NS India, and have been considering expanding the venture.
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output capacity at the Hazira plant in western India would increase to between
14 million and 15 million tonnes from about 8 million tonnes by building new
blast furnaces, he said, without giving a value for the new investment or other
details.
"Our
main purpose is to grab growing local demand," he said, adding that Nippon
Steel would consider further expanding Hazira and building a new steelmill in
eastern India.
AM/NS India
said last week it would buy some infrastructure assets from Essar Group for
$2.4 billion to strengthen its steel business.
"The
acquisition will give higher flexibility for AM/NS to expand operations,"
Mori said.
Steelmakers
face an uncertain outlook, with volatile prices for coking coal, iron ore and
other raw material caused by the Ukraine crisis and with China's weak steel
output.
Coking coal
now unusually trades at a steep discount to thermal coal, used mainly in
electricity generation, which is booming because of disruptions to Russian
energy supplies.
Nippon
Steel was using some coking coal as an alternative to thermal coal to a limited
extent as only coking coal of a particular quality could be used for this
purpose, Mori said.
In August,
Nippon Steel forecast a 6% drop in annual net profit, a smaller fall than
analysts expected, saying it could pass on higher prices despite lower output.
Nippon
Steel, now in final talks with automakers and other major customers, wanted to
hike sales prices by at least 40,000 yen ($287) a tonne for the October-March
period, compared with April-September, Mori said.
"We
have borne the impact of higher material costs and the lower yen," Mori
said. "We are determined not to give in to passing on the higher costs to
product prices."